Court Upholds FTC Position on Avatar Technology

Recorded Statements Delivered by Live Agents are Robocalls

Manually operated recorded voice delivery systems are a popular a call center solution that combines auto dialing capability with interactive prerecorded messages.

Commonly referred to as Soundboards or Avatar Systems, calls using the technology deliver recorded statements that are manually selected by a live agent. Based on this key distinction from a traditional robocall, do you need to secure prior express, written consent of the consumer before calling them using an Avatar system? At first, the answer was no. In September of 2009, the FTC issued an informal staff opinion stating that the technology would not be subject to the prerecorded message provisions of the Telemarketing Sales Rule.

Complaints Mount

The FTC’s 2009 opinion was based on a system in which a single live agent stays with the call from beginning to end, listens to every word spoken by the call recipient, determines what is heard by the call recipient, and has the ability to interrupt recordings and use his or her own voice to communicate with the call recipient if needed.

Following the 2009 opinion, Avatar usage became widespread, but the most common Avatar systems bore little resemblance to the one envisioned by the FTC. Thanks in large part to bad programming, inadequate training, and poor scripting, consumers were not receiving appropriate responses to their questions or comments, and live agents rarely (if ever) intervened to provide a human response. As a consequence, complaints about Avatar calls began to mount.

Opinion Reversed

In response to these complaints, in November of 2016 the FTC issued a staff letter reversing its previous opinion and stating they would begin treating Avatar calls as being no different than traditional robocalls that require the prior express, written consent of the call recipient.

Challenge

In January of 2017, the Soundboard Association, a trade group representing companies that manufacture and use Avatar technology, filed suit to block the FTC’s enforcement of its new interpretation, arguing that the FTC was required to provide notice and a comment period before implementing the change. In addition, the Soundboard Association argued that the new FTC interpretation violated the First Amendment, because the so-called “robocall rule” applies to not-for-profit organizations calling first time donors, but does not apply to previous donors.

Outcome

On April 24, 2018, the District of Columbia Court of Appeals issued its ruling. It agreed that the FTC’s interpretation constituted a final agency action, but held that this was not a legislative rule, but rather an interpretive one that did not require a notice and comment period. The Court also dismissed the Soundboard Association’s First Amendment argument, finding that “the restriction is content-neutral because its applicability “turns on the caller’s relationship with the consumer rather than what may be said in the calls.”

Accordingly, the FTC staff position remains in place- a company must have consent before placing calls using an Avatar system. However, as is always the case with the TCPA, compliance is only part of the equation.